SOURCE: DryShips Inc.

DryShips Inc.

October 26, 2009 16:26 ET

DryShips Inc. Reports Financial and Operating Results for the Third Quarter Ended September 30, 2009

ATHENS, GREECE--(Marketwire - October 26, 2009) - DryShips Inc. (NASDAQ: DRYS), a global provider of marine transportation services for drybulk cargoes and offshore oil deep water drilling, today announced its unaudited financial and operating results for the third quarter and nine month period ended September 30, 2009.

Third Quarter 2009 Financial Highlights

-- For the third quarter of 2009, the Company reported a net profit of
   $35.6 million or $0.12 basic and diluted profit per share. Included
   in the third quarter 2009 results is a loss of $39.3 million or $0.15
   per share associated with the valuation of the Company's interest
   rate swaps. Excluding this item, net income would amount to $74.9
   million or $0.27 per share.
   - Basic earnings per share for the third quarter of 2009 include a
     non-cash accrual for the cumulative dividends on the Series A
     Convertible Preferred Stock, amounting to $4.0 million, which
     reduces the income available to common shareholders (basic earnings
     per share is calculated as net income less accrued dividends on
     preferred stock divided by weighted average number of common shares
     outstanding).

George Economou, Chairman and Chief Executive Officer of the Company commented:

"We are pleased to report another quarter of profitable operating results for DryShips as both our drilling and drybulk units continued to perform at high utilization rates. We are particularly pleased with the high utilization rates achieved by the Eirik Raude, which is drilling off Ghana at the Jubilee field for Tullow Oil. The Leiv Eiriksson is expected to complete its assignment with Shell in the North Sea during October and commence mobilization for drilling operations in the Black Sea under a 3-year contract for Petrobras. Most economic indicators for the world economy seem to indicate the end of the recession and we are also seeing the signs of recovery from countries besides China and India. The stimulus plan implemented by the Chinese government earlier in the year has by no means played itself out, as the majority of this money went to infrastructure development which is medium to long term projects. While drybulk shipping demand is projected to remain strong for the coming years, the large orderbook remains a cause for concern, especially for 2010. Actual deliveries in the first nine months of 2009 were much smaller than were anticipated at the beginning of the year and offer some hope that cancellations and delays will alleviate the projected oversupply.

"Our drybulk fleet is now virtually fully fixed for the remainder of 2009 and 2010 and 77% fixed for 2011 at healthy levels and we are prepared to leverage the volatility in freight rates in the future through further vessel acquisitions. DryShips now has $1.44 billion in fixed EBITDA from its dry bulk and drilling units over the next 2.25 years and we are well positioned to take advantage of acquisition opportunities as they arise."

Financial Review: 2009 Third Quarter

The Company recorded a net profit of $35.6 million, or $0.12 basic and diluted profit per share for the three-month period ended September 30, 2009, as compared to a net profit of $180.0 million, or $4.13 basic and diluted earnings per share for the three-month period ended September 30, 2008. EBITDA, which is defined and reconciled later in this press release, was $104.8 million for the third quarter of 2009 as compared to $258.5 million for the same period in 2008.

Included in the third quarter results is a loss of $39.3 million or $0.15 per share associated with the valuation of the Company's interest rate swaps. Excluding this item, net income would amount to $74.9 million or $0.27 per share.

Basic earnings per share for the third quarter of 2009 include a non-cash accrual for the cumulative dividends on the Series A Convertible Preferred Stock, amounting to $4.0 million, which reduces the income available to common shareholders.

For the drybulk carrier segment, net voyage revenues (voyage revenues minus voyage expenses) decreased by $113.4 million to $114.8 million for the three-month period ended September 30, 2009, as compared to $228.2 million for the three-month period ended September 30, 2008. The decrease is attributable to the substantially lower freight market during the third quarter of 2009 as compared to the third quarter of 2008. For the offshore drilling segment, revenues from drilling contracts amounted to $107.6 million for the three-month period ended September 30, 2009 as compared to $88.1 for the same period in 2008.

Total vessel and rig operating expenses and total depreciation and amortization decreased to $56.2 million and $49.4 million, respectively, for the three-month period ended September 30, 2009 from $58.3 million and $50.4 million, respectively, for the three-month period ended September 30, 2008. Total general and administrative expenses decreased to $22.9 million from $27.8 million during the comparative periods.

Interest and finance costs net of interest income decreased to $16.3 million for the three-month period ended September 30, 2009, compared to $27.4 million for the three-month period ended September 30, 2008. This decrease is primarily attributable to decreased average interest rate levels during the three-month period ended September 30, 2009, as compared to the same period in 2008.

Fleet List
The table below describes our drybulk fleet profile as of October 23, 2009:

                       Year                   Gross rate  Redelivery
                       Built   DWT     Type    Per day     Earliest  Latest

Fixed rate employment

Capesize:
Alameda                2001  170,269 Capesize $ 21,000      Feb-11   May-11
Brisbane               1995  151,066 Capesize $ 25,000      Dec-11   Apr-12
Capri                  2001  172,579 Capesize $ 61,000      Apr-18   Jun-18
Flecha                 2004  170,012 Capesize $ 55,000      Jul-18   Nov-18
Manasota               2004  171,061 Capesize $ 67,000      Feb-13   Apr-13
Mystic                 2008  170,500 Capesize $ 52,310      Aug-18   Dec-18
Samsara                1996  150,393 Capesize $ 57,000      Dec-11   Apr-12

Panamax:
Avoca                  2004   76,500  Panamax $ 45,500      Aug-13   Dec-13
Bargara                2002   74,832  Panamax $ 43,750      May-12   Jul-12
Capitola               2001   74,832  Panamax $ 39,500      Jun-13   Aug-13
Catalina               2005   74,432  Panamax $ 40,000      Jun-13   Aug-13
Conquistador           2000   75,607  Panamax $ 17,750      Aug-11   Nov-11
Coronado               2000   75,706  Panamax $ 18,250      Sep-11   Nov-11
Ecola                  2001   73,931  Panamax $ 43,500      Jun-12   Aug-12
Iguana *               1996   70,349  Panamax $ 13,456      Sep-11   Sep-11
La Jolla               1997   72,126  Panamax $ 14,750      Aug-11   Nov-11
Levanto                2001   73,931  Panamax $ 16,800      Sep-11   Nov-11
Ligari                 2004   75,583  Panamax $ 55,500      Jun-12   Aug-12
Maganari               2001   75,941  Panamax $ 14,500      Jul-11   Sep-11
Majorca                2005   74,364  Panamax $ 43,750      Jun-12   Aug-12
Marbella               2000   72,561  Panamax $ 14,750      Aug-11   Nov-11
Mendocino              2002   76,623  Panamax $ 56,500      Jun-12   Sep-12
Ocean Crystal          1999   73,688  Panamax $ 15,000      Aug-11   Nov-11
Oliva                  2009   75,000  Panamax $ 17,850      Oct-11   Dec-11
Oregon                 2002   74,204  Panamax $ 16,350      Aug-11   Oct-11
Padre                  2004   73,601  Panamax $ 46,500      Sep-12   Dec-12
Positano               2000   73,288  Panamax $ 42,500      Sep-13   Dec-13
Rapallo                2009   75,000  Panamax $ 15,400      Aug-11   Oct-11
Redondo                2000   74,716  Panamax $ 34,500      Apr-13   Jun-13
Saldanha               2004   75,500  Panamax $ 52,500      Jun-12   Sep-12
Samatan                2001   74,823  Panamax $ 39,500      May-13   Jul-13
Sorrento               2004   76,633  Panamax $ 17,300      Sep-11   Dec-11
Toro                   1995   73,034  Panamax $ 16,750      May-11   Jul-11
Xanadu                 1999   72,270  Panamax $ 39,750      Jul-13   Sep-13

Supramax:
Pachino (ex VOC
 Galaxy)               2002   51,201 Supramax $ 20,250      Sep-10   Feb-11
Paros I (ex Clipper
 Gemini)               2003   51,201 Supramax $ 27,135      Oct-11   May-12

Spot rate employment

Panamax:
Delray                 1994   71,862  Panamax
Primera                1998   72,495  Panamax
Sonoma                 2001   74,786  Panamax

* Based on a synthetic time charter




                    Summary Operating Data (unaudited)

           (Dollars in thousands, except average daily results)

                                 Three Months Ended     Nine Months Ended
                                     September 30,         September 30,
                                --------------------  --------------------
                                  2008       2009       2008       2009
                                ---------  ---------  ---------  ---------
Average number of vessels(1)         38.9       38.5       38.6       37.8
Total voyage days for vessels(2)    3,568      3,492     10,485     10,125
Total calendar days for
 vessels(3)                         3,578      3,541     10,567     10,326
Fleet utilization(4)                 99.7%      98.6%      99.2%      98.1%
Time charter equivalent(5)      $  63,947  $  32,887  $  65,909  $  29,986
Vessel operating expenses
 (daily)(6)                     $   5,488  $   5,536  $   5,421  $   5,392

(1) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.

(2) Total voyage days for fleet are the total days the vessels were in our possession for the relevant period net of off hire days.

(3) Calendar days are the total number of days the vessels were in our possession for the relevant period including off hire days.

(4) Fleet utilization is the percentage of time that our vessels were available for revenue generating voyage days, and is determined by dividing voyage days by fleet calendar days for the relevant period.

(5) Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing voyage revenues (net of voyage expenses) by voyage days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods.

                                 Three Months Ended     Nine Months Ended
                                     September 30,         September 30,
                                --------------------  --------------------
                                  2008       2009       2008       2009
                                ---------  ---------  ---------  ---------
Voyage revenues                   239,970    120,585    730,954    325,052
Voyage expenses                   (11,807)    (5,742)   (39,899)   (21,447)
                                ---------  ---------  ---------  ---------
Time charter equivalent
 revenues                         228,163    114,842    691,055    303,605
                                ---------  ---------  ---------  ---------
Total voyage days for vessels       3,568      3,492     10,485     10,125
Time charter equivalent            63,947     32,887     65,909     29,986

(6) Daily vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs is calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period.


                           Financial Statements

            Unaudited Condensed Consolidated Income Statements

(Expressed in Thousands
 of U.S. Dollars except    Three Months Ended         Nine Months Ended
 for share and per            September 30,             September 30,
 share data)            ------------------------  ------------------------
                            2008         2009         2008         2009
                        -----------  -----------  -----------  -----------

REVENUES:
Voyage revenues         $   239,970  $   120,584  $   730,954  $   325,052
Revenues from drilling
 contracts                   88,064      107,619      131,859      310,251
                        -----------  -----------  -----------  -----------
                            328,034      228,203      862,813      635,303

EXPENSES:
Voyage expenses              11,807        5,742       39,899       21,447
Vessel operating
 expenses                    19,637       19,602       57,287       55,680
Drilling rigs operating
 expenses                    38,691       36,598       52,079      105,924
Depreciation and
 amortization                50,378       49,416      108,313      146,569
Gain on sale of vessels     (65,766)           -     (226,024)      (2,432)
Loss on contract
 cancellations, net               -            -            -      215,532
General and
 administrative
 expenses                    27,795       22,893       53,142       66,313
                        -----------  -----------  -----------  -----------

Operating income            245,492       93,952      778,117       26,270

OTHER INCOME:
Interest and finance
 costs, net of interest
 income                     (27,444)     (16,276)     (65,988)     (64,930)
Gain (loss) on interest
 rate swaps                 (36,997)     (39,306)     (30,918)      20,988
Other, net                     (396)       1,839          103        1,304
Equity in loss of
 investee                         -            -       (6,893)           -
Income taxes                   (641)      (3,505)      (1,508)      (9,859)
                        -----------  -----------  -----------  -----------
Total other income
 (expenses), net            (65,478)     (57,248)    (105,204)     (52,497)
                        -----------  -----------  -----------  -----------

Net income (loss)           180,014       36,704      672,913      (26,227)

Net income attributable
 to Noncontrolling
 interests                      (12)      (1,063)     (16,825)      (7,178)
                        -----------  -----------  -----------  -----------

Net income (loss)
 attributable to
 DryShips Inc. common
 stockholders           $   180,002  $    35,641  $   656,088  $   (33,405)
                        ===========  ===========  ===========  ===========

Earnings per common
 share, basic           $      4.13  $      0.12  $     15.73  $     (0.19)
Weighted average number
 of shares, basic        42,721,141  253,824,880   41,029,206  193,621,270

Earnings per common
 share, diluted         $      4.13  $      0.12  $     15.73  $     (0.19)
Weighted average number
 of shares, diluted      42,721,141  253,824,880   41,029,206  193,621,270




              Unaudited Condensed Consolidated Balance Sheets

(Expressed in Thousands of U.S. Dollars               December   September
 except for share and per share data)                 31, 2008    30, 2009
                                                    ----------- -----------

ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                         $   303,114 $   291,583
  Restricted cash                                       320,560     377,713
  Trade accounts receivable, net                         52,441      44,819
  Other current assets                                   44,312      59,250
                                                    ----------- -----------
  Total current assets                                  720,427     773,365
                                                    ----------- -----------

FIXED ASSETS, NET:
  Advances for vessels under construction and
   acquisitions                                         535,616   1,138,087
  Vessels, net                                        2,134,650   2,089,781
  Drilling rigs, machinery and equipment, net         1,393,158   1,340,364
                                                    ----------- -----------
  Total fixed assets, net                             4,063,424   4,568,232
                                                    ----------- -----------

OTHER NON CURRENT ASSETS:
 Other non-current assets                                58,829      63,246
                                                    ----------- -----------
Total non current assets, net                            58,829      63,246
                                                    ----------- -----------
  Total assets                                      $ 4,842,680 $ 5,404,843
                                                    =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt                 $ 2,370,556 $ 1,762,777
  Other current liabilities                             154,492     137,667
                                                    ----------- -----------
  Total current liabilities                           2,525,048   1,900,444
                                                    ----------- -----------

NON CURRENT LIABILITIES
 Long term debt, net of current portion                 788,314     694,896
 Other non-current liabilities                          237,746     141,864
                                                    ----------- -----------
Total non current liabilities                         1,026,060     836,760
                                                    ----------- -----------

COMMITMENTS AND CONTINGENCIES                                 -

STOCKHOLDERS' EQUITY:
  Total DryShips Inc. stockholders' equity            1,291,572   2,667,639
                                                    ----------- -----------
  Total liabilities and stockholders equity         $ 4,842,680 $ 5,404,843
                                                    =========== ===========

EBITDA Reconciliation

EBITDA represents net income before interest, taxes, depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of EBITDA may not be comparable to that reported by other companies. EBITDA is included herein because it is a basis upon which the Company assesses its liquidity position, it is used by our lenders as a measure of our compliance with certain loan covenants and because the Company believes that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness.

The following table reconciles net income to EBITDA:

                                  Three      Three      Nine       Nine
                                  Months     Months     Months     Months
                                  Ended      Ended      Ended      Ended
                                September  September  September  September
(Dollars in thousands)          30, 2008   30, 2009   30, 2008   30, 2009
                                ---------- ---------- ---------- ---------

Net income / (loss)                180,002     35,641    656,088   (33,405)

Add: Net interest expense           27,444     16,276     65,988    64,930
Add: Depreciation and
 amortization                       50,378     49,416    108,313   146,569
Add: Income taxes                      641      3,505      1,508     9,859

                                ---------- ---------- ---------- ---------
EBITDA                             258,465    104,838    831,897   187,953
                                ========== ========== ========== =========

Conference Call and Webcast: Tuesday, October 27th , 2009

As announced, the Company's management team will host a conference call, on Tuesday, October 27, 2009 at 8:30 AM Eastern Daylight Time to discuss the Company's financial results.

Conference Call Details

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1(866) 819-7111 (from the US), 0(800) 953-0329 (from the UK) or +(44) 1452 542 301 (from outside the US). Please quote "DryShips."

A replay of the conference call will be available until October 29, 2009. The United States replay number is 1(866) 247-4222; from the UK 0(800) 953-1533; the standard international replay number is (+44) (0) 1452 55 00 00 and the access code required for the replay is: 2133051#

A replay of the conference call will also be available on the Company's website at www.dryships.com under the Investor Relations section.

Slides and Audio Webcast

There will also be a simultaneous live webcast over the Internet, through the DryShips Inc. website (www.dryships.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

About DryShips, Inc.

DryShips Inc., based in Greece, is an owner and operator of drybulk carriers and offshore oil deep water drilling that operate worldwide. As of the day of this release, DryShips owns a fleet of 39 drybulk carriers comprising seven Capesize, 30 Panamax and two Supramax, with a combined deadweight tonnage of over 3.4 million tons, 2 ultra deep water semisubmersible drilling rigs and 4 ultra deep water newbuilding drillships.

DryShips Inc.'s common stock is listed on the NASDAQ Global Market where it trades under the symbol "DRYS."

Visit the Company's website at www.dryships.com

Forward-Looking Statement

Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although DryShips Inc. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, DryShips Inc. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.

Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charterhire rates and vessel values, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in DryShips Inc.'s operating expenses, including bunker prices, dry-docking and insurance costs, or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.

Risks and uncertainties are further described in reports filed by DryShips Inc. with the US Securities and Exchange Commission.

Contact Information

  • Investor Relations / Media:
    Nicolas Bornozis
    Capital Link, Inc. (New York)
    Tel. 212-661-7566
    E-mail: dryships@capitallink.com